Warsaw, Poland, April 4, 2022—A path-breaking transaction launched by IFC and Santander Bank Polska S.A. (SPL) will help increase access to climate finance in Poland, while boosting market resilience and stimulating the country's recovery from the COVID-19 pandemic.
In the first synthetic risk transfer (SRT) in emerging markets with a climate risk mitigation objective, IFC will support SPL's green lending and Poland's climate goals. Santander Corporate & Investment Banking (SCIB) acted as the Sole Arranger for the transaction.
IFC will provide an up to $120 million-equivalent second-loss guarantee on credit losses that might be experienced in a $730 million-equivalent portfolio of consumer loans on the balance sheet of SPL, a member of Santander Group, one of the world's largest banking groups in terms of market capitalization. SPL will deploy capital freed up as a result of the IFC loss protection to undertake at least $600 million-equivalent of new green lending.
SRTs are transactions where banks purchase credit loss protection from investors on predetermined loan portfolios to lower risk weights associated with such exposures and therefore free up capital for new lending.
This is one of the first SRT in any emerging market or developing economy—including Poland. The transaction also broadens the range of investors who undertake SRTs in Poland and expands green lending by financial institutions which is vital to achieving the country's climate transition objectives.
"Thanks to this synthetic securitisation we are able to risk-share a part of our portfolio with IFC and release capital, which will then be redeployed to support sustainable lending. We see IFC as an important partner in the realization of both capital targets, as well as our Responsible Banking strategy," said Maciej Reluga, Management Board Member at SPL.
"We have previously arranged an SRT transaction with IFC in other markets and are delighted to now help extend the relationship into Poland. This is another important development for Santander's large SRT program," said Steve Gandy, Global Head of PDM Notes & Structuring at SCIB.
Capital being freed up by the IFC SRT with SPL will support additional climate finance activities at the bank involving renewable energy, energy, and water efficiency, as well as green building projects.
"IFC has been a pioneer in the area of climate finance, and the SRT we are undertaking with SPL represents an important milestone," said Vittorio Di Bello, IFC's Regional Head of Industry for Financial Institutions in Europe. "It will help Poland achieve its climate change targets and facilitate a sustainable post-pandemic recovery."
SPL started cooperation with IFC in 2016 with a €150 million loan for SPL's leasing subsidiary dedicated to financing women entrepreneurs. A year later, SPL successfully executed together with IFC the first subordinated green bond in Poland totaling $150 million. The 2022 synthetic securitization with IFC is the fourth synthetic securitization transaction made by SPL.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
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About Santander Bank Polska
Santander Bank Polska (SPL)—a member of Santander Group—is ranked among the top three banks in the Polish banking sector and is the largest private bank in Poland (by total assets). SPL maintains stable sources of funding, strong capital position and safe liquidity with a diversified asset portfolio. The Responsible Banking agenda based on ESG metrics is one of the pillars of SPL strategy. SPL is an active player in the green financing market supporting companies in the energy transformation, financing the development of renewable energy sources, and offering green solutions to personal customers.
